US SEC Warns of Risks of Buying Securities of Crypto Assets

Unregistered offerings of these securities may not provide important data, including audited financial statements, for informed decision-making, the SEC said.

The securities watchdog has cracked down on the crypto industry, which its chairman has called a “Wild West” riddled with misconduct. His efforts accelerated after the November collapse of Sam Bankman-Fried’s FTX cryptocurrency exchange.

Crypto exchange Coinbase announced on Wednesday that it had received a Wells Notice – a formal statement that SEC staff intend to recommend enforcement action.

In its Investor Alert, the SEC also warned investors about the “proof of reserves” services offered by some crypto exchanges that are supposed to allow users to verify that an exchange has enough assets to back up trades. customer assets.

“Crypto asset entities could use them in place of audited financial statements to obfuscate and confuse customers about the security of their assets,” the SEC said.